For-profit colleges are continuing to face scrutiny; this time the scrutiny is coming from the Senate Health, Education, Labor and Pensions (HELP) Committee. Committee Chairman Sen. Tom Harkin (D-Iowa) released a report summarizing a two-year investigation into the for-profit higher education industry and the findings are troublesome.


“In this report, you will find overwhelming documentation of overpriced tuition, predatory recruiting practices, sky-high dropout rates, billions of taxpayer dollars spent on aggressive marketing and advertising, and companies gaming regulations to maximize profits. These practices are not the exception — they are the norm; they are systemic throughout the industry, with very few exceptions,” Harkin said. Source: United States Senate


You read that right; Harkins said “billions of taxpayer dollars spent.” More than $30 billion a year in taxpayer monies are finding their way to for-profit colleges including:


  • 25 percent of U.S. Department of Education student financial aid funds
  • 37 percent of Post-9/11 GI Bill benefits
  • 50 percent of Department of Defense Tuition Assistance funds

Taxpayer dollars are keeping these businesses operating in the black. The report revealed that public dollars were responsible for 86 percent of the revenue generated by the top 15 publicly traded for-profit colleges. Without taxpayer dollars these institutions would likely shut down.


This $30 billion in annual taxpayer funding wouldn’t be so bad if the majority of the students attending these colleges actually graduated. During the 2008-2009 enrollment year, half of the four-year students withdrew by mid-2010. This figure jumps to 64 percent of students in a two-year program withdrawing before they earned a degree.


For comparison, 85 percent of undergraduate students enrolled at the University of Virginia graduated within four years and 93 percent completed their degree program within six years.


Another problem highlighted in the Senate report is the exorbitant cost of attending a for-profit college. Tuition costs for a B.A. program are 19 percent higher than a comparable program at a public university. Tuition costs for a two-year program, which has traditionally been the least expensive way to obtain a degree, are four times higher than fees at a public community college.


So here we have for-profit colleges reaping the benefits of taxpayer-supported college financing programs charging higher than average tuition fees but producing fewer than average graduates. Obviously the system is broken and it looks like something needs to be done about it, unless of course you’re an executive at a for-profit college.


“The average CEO salary was $7.3 million in 2009, more than seven times the average salary of large public university presidents, and more than twice the average at non-profit colleges and universities.”


This eye-opening report is a must-read for parents preparing to send their children off to college as well as adults seeking to further their education. The entire four-volume report is available online: For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success (PDF).


For-profit colleges target of Senate investigation
Senator cites 'overpriced tuition, predatory recruiting practices' in two-year investigation.